South Africa’s GDP growth remains tepid amid structural challenges

South Africa’s economic growth for the second quarter of 2024 was a mere 0.4% quarter-on-quarter, reflecting a continued struggle to gain momentum. Over the last 12 months, the economy has grown by only 0.3%, a figure so low that it borders on recessionary levels.This sluggish performance underscores the ongoing economic challenges that the country faces. While last week’s gross domestic product (GDP) results mark a second consecutive quarter of positive growth, following a flat Q1 2024 and a 0.3% increase in Q4 2023, the numbers highlight a persistent challenge: The economy is growing well below the population growth rate of approximately 1.5%.This discrepancy underscores the lack of significant impact from ongoing economic reforms and suggests continued social pressure and high unemployment.The GDP figures don’t yet reflect the optimism we’ve seen in the financial markets since the Government of National Unity (GNU) took office. Strong returns on the Johannesburg Stock Exchange (JSE), bond market and a strengthening rand are more sentiment-driven, with market watchers hoping that the new government will address the structural barriers hindering economic growth.Recent data, including vehicle sales and the Purchasing Manager’s Index (PMI) index, an economic indicator that reflects the health of a country’s manufacturing and services sectors, show fundamental weaknesses in the South African economy. The data could signal that the current market rally may not be sustainable without significant economic improvements.Manufacturing and construction also showed promise, but the agricultural sector contracted by 2.1%, following a high base in the previous quarter and a decline in field crops and animal products. On the expenditure side, household consumption rose by 1.4%, a positive sign despite challenging conditions.However, a concerning trend is the continued decline in gross fixed capital formation, a reflection of the business sector’s level of willingness to invest in assets that boost the economy, highlighting the need for broader investment beyond just the solar boom.-MONEYWEB

South Africa’s GDP growth remains tepid amid structural challenges

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Republikein 2025-12-17

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South Africa’s GDP growth remains tepid amid structural challenges

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Republikein 2025-12-17

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